Downsizing forces you to make tough decisions for every part of your business, including your health insurance plan. Unfortunately, you need to make these choices in order for your organization to survive. These tips will help manage health care during downsizing to lower costs while still supporting your current and former staff.
Getting Employee Feedback
Before you start making changes to your benefits, you should ask your employees for their feedback. Let them know your organization cannot afford to keep the same package and needs to make some adjustments. Give them a choice of what they would like to keep.
Do they want to maintain as generous a health insurance plan as possible? Or would they rather have less health insurance coverage but still maintain other benefits like dental and vision? Are there any changes they definitely do not want — like they can’t switch to an HMO with a restricted provider network because it would prevent them from seeing their doctors?
While your employees are always going to be disappointed about cuts, by getting their input ahead of time you can make the best of a bad situation.
Finding More Affordable Coverage
You should contact your health insurance agent or broker and let them know you need to lower health care costs, even if it means changing plans. Every year, new plans hit the market and there may be a less expensive option available.
The easiest time to make a switch is when your current plan expires and you sign up for a new one. Plans last for one year so you can switch to something less expensive when it’s time to renew.
You may be able to make some changes mid-year, though, like increasing the amount employees pay per month. However, you need to give 60 days of notice to your employees before making these changes or else you’ll owe a fine of $1,000 per covered employee, according to Anthem.
To reduce the cost of health care during downsizing, you could share more of the costs with your employees. One option is to have them pay more of the health insurance premiums. You could also switch to a less expensive plan with higher out-of-pocket costs or fewer benefits — like a more restricted provider network or less coverage for prescriptions.
You should work with your employees to reduce unnecessary health care spending. Teach them how to use the plan effectively, like using generics over brand-name prescriptions or calling your plan’s nursing hotline before visiting the emergency room. Consider adding a workplace wellness plan as well, even though funds are tight. This small investment now will control your long-term insurance costs by keeping your employees healthier.
The Importance of Maintaining Insurance
During this tough stretch, you should still do everything possible to continue offering health insurance. Health insurance is the top-rated workplace benefit according to Glassdoor. A Harvard Business Review study also found that 88 percent of job applicants would consider working for less money at a company that offers health insurance.
Getting rid of your plan will make it more difficult to hire and retain the top employees you need to turn things around. While you may shift more costs to employees, you should still offer health insurance coverage.
Supporting Downsized Employees
When downsized employees leave your organization, you should let them know about their health insurance options. They also receive a special election period to sign up for individual coverage through the ACA, even if it’s outside of open enrollment.
If you have 20 or more employees and offer a group health insurance plan, the employee could also elect to stay on the plan for another 18 months through COBRA, according to the DOL. However, you do not need to pay any of their premium. Instead, the employee will need to pay the full cost to stay on your plan.
By controlling health care and other costs now, you can survive this difficult stretch and hopefully return to offering more generous benefits in the near future.
This content is provided solely for informational purposes. It is not intended as and does not constitute legal advice. The information contained herein should not be relied upon or used as a substitute for consultation with legal, accounting, tax and/or other professional advisers.
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